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But the oil price slump is not the only factor, with inflation stuck below the central Bank of Korea's target range of 2.5-3.5 per cent for almost three years.

Warnings about South Korea stumbling into a Japan-style deflationary trap have been increasing in recent months and Choi's remarks were seen as reflecting government hopes that the central bank will consider a further interest rate cut.

After two rate cuts last year, the Bank of Korea's benchmark rate is currently at a record-equalling low of 2.0 per cent - a level not seen since 2009-10 when Asia's fourth-largest economy was seeking to recover from the global financial crisis.

The central bank in January slashed its economic growth forecast for this year to 3.4 per cent from the previous 3.9 per cent, while it lowered its inflation outlook to 1.9 per cent from the 2.4 per cent previously stated.

Mr Choi said the government would maintain its expansionary fiscal policies to boost domestic consumption, citing uncertainties in Europe, Japan and China.